Kerosene lamps are widely used to provide light in homes, especially in poorer areas of third world countries. Kerosene lamps are problematic. They produce harmful fumes. They are also inefficient in terms of light produced relative to the amount of fuel used. They are also higher polluting, in terms of light produced per ton of carbon emission, than an equally illuminating electrical lamp powered by a power station. This is true even when taking into account the carbon emissions at the power station that would be attributable to the electrical lamp.
A “carbon offset” is a financial instrument representing a reduction in greenhouse gas emissions. Carbon offsets are measured in metric tons of carbon dioxide-equivalent. One carbon offset represents a reduction of one ton of carbon dioxide or its equivalent in other greenhouse gases. Companies and governments can buy carbon offsets to comply with caps on total carbon dioxide they are allowed to emit. Also, individuals and companies can purchase carbon offsets to mitigate their own greenhouse gas emissions.
Offsets are typically generated from emissions-reducing projects, most commonly renewable energy projects such as with wind and solar energy. Purchase and withdrawal of emissions trading credits also occurs, which creates a connection between the voluntary and regulated carbon markets.
Carbon offsetting as part of a “carbon neutral” lifestyle has gained appeal and momentum. The Kyoto Protocol has sanctioned offsets as a way for governments and companies to earn carbon credits which can be traded on a marketplace. The protocol established the Clean Development Mechanism (CDM), which validates and measures projects to ensure they produce authentic benefits and are genuinely “additional” activities that would not otherwise have been undertaken. Organizations that have difficulty meeting their emissions quota are able to offset by buying CDM-approved Certified Emissions Reductions.
The commercial system has contributed to the increasing popularity of voluntary offsets among individuals, companies, and organizations. Offsets may be cheaper or more convenient alternatives to reducing one's own fossil-fuel consumption.
The CDM identifies over 200 types of projects suitable for generating carbon offsets, which are grouped into broad categories. The most common are renewable energy, methane abatement, energy efficiency, and fuel switching. Renewable energy offsets commonly include wind, solar and hydroelectric power. Some of these offsets are used to reduce the cost differential between renewable and conventional energy production, increasing the commercial viability of a choice to use renewable energy sources.
Renewable Energy Credits (RECs) are also sometimes treated as carbon offsets, although the concepts are distinct. Whereas a carbon offset represents a reduction in greenhouse gas emissions, a REC represents a quantity of energy produced from renewable sources. To convert RECs into offsets, the clean energy must be translated into carbon reductions, typically by assuming that the clean energy is displacing an equivalent amount of conventionally produced electricity from the local grid. This is known as an indirect offset, because the reduction doesn't take place at the project site itself, but rather at an external site. Once it has been accredited by the United Nations Framework Convention on Climate Change (UNFCCC), a carbon offset project can be used as carbon credit and linked with official emission trading schemes.
Due to their indirect nature, many types of offset are difficult to verify. Some providers obtain independent certification that their offsets are accurately measured, to distance themselves from potentially fraudulent competitors.